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tv   Squawk on the Street  CNBC  September 11, 2012 9:00am-12:00pm EDT

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everything's loaded nowadays, ken. but thank you. thank you. >> you on delay? >> yeah, we're still on delay, thank you. thank you. >> join us tomorrow. right now it's time for "squawk on the street." good morning, welcome to "squawk on the street" on this 11th anniversary of the 9/11 terrorist attacks. i'm carl quintanilla here at the new york stock exchange. we're going to observe a moment of silence in a few moments, but first take a look at futures. a lot of news going on, including this headline. just crossed a couple of minutes ago, moody's warning the u.s. rating may get cut in, in fact, the fiscal clip is not resolved. future still hanging in the green here this morning. as for europe, a lot going on there, as well. we'll get into that later. mixed picture with the ftse down 15 points. >> more signs of a slowdown. a warning sending a chill through luxury retailers,
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particularly in china. a downgrade of coach putting further pressure on the sector. mcdonald's global sales meets expectations. where were the sales strongest? outside the u.s. and europe. >> only one day to go until the iphone 5 release. could the ieconomy help the u.s. economy? >> and facebook ceo mark zuckerberg going to hit the stage for the first time since the ipo at the tech crunch conference this afternoon. could that be a catalyst for the stock? but getting back to the high-end retailers such as coach, tiffany, ralph lauren under pressure after burberry expects lower sales. they suggest growth is becoming more challenging. they're down double digit percentages, last check about 18%. this is the biggest drop we've seen since the economy ipo'ed,
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and maybe we shouldn't be so surprised. >> they have the worst assortment of people who have lost their way. everyone says you should spread this out to others, go to a burberry store, you'll see what i mean, they're incredibly overpriced, do not have the right fashion. i want to contrast with coors that is completely on fire and has a higher price. burberry is a complete julius caesar story. it's not in the farce, it's in you. you have really missed the mark. here's the fashion industry, pvh, vf, michael kors, i'm not putting burberry in the same category. >> at two, jim? >> yeah. i went in there recently trying to buy a tie -- >> i remember. >> when i was trying to buy a tie, at the counter, it mean, look, i'm not one of these guys is a chinski guy, but i do like raisinettes, and i get to the counter and it was $170. and i said this is an outlet
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store, you should get ten ties, they said this is burberry. well, i've got news for you, this is what happens when you charge that much. >> you think it's more of a fashion faux pas as opposed to a slowdown in china and people are willing to, you know, the high rollers, not quite rolling as high. >> i don't like it when people -- where was eric wiseman, was he claiming anybody when they owned the quarter? listen to manny tarico. china's real good. i don't like it when a company has missed and missed suddenly comes up and tells you things aren't that good when ralph lauren has delivered and pvh has delivered and michael kors has delivered. i hope people buy kors on the secondary lower because the company that has really lost its way and blaming everybody else. >> last night you called them the fashionistas. you said kors, gap, nordstrom, urban. >> urban. >> lulu.
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>> i did lulu because of the 15% gain. urban is on fire, they have returned to their roots of when a couple of kids from university of pennsylvania in 1973 discovered a way to be able to -- what do you think this is like the moe green speech? >> i thought '73 was a good year. the world series, i was having a flashback to '73, that's all. >> well, listen to me. >> i was 9 years old. "happy days." >> saint was forced out, went to david urban, urban outfitters brings in the founder. their stores are completely revamped and their price points are great, and burberry is expensive, $500 for a not great raincoat, it's not what i'm going to pay. >> brings to mind cutting coach to a whole. it's gotten awfully close to their price target of about $63. we're hard-pressed to pay 15 times next year's earnings, at least -- clarity around pricing
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and cotton and so forth. >> to mix metaphors here, have returned to where they were when they disappointed. my charitable trust owns coach, wasn't able to get a lot. i hope it goes down on this. they made execution issues, but at the end they are a good company. burberry, sorry, guys, you are in denial. >> shares fall on the back of the burberry pre-announcement, ralph lauren, kors, movato all in the group of luxury retailers that are exposed to the high rollers in china which are being thrown out with the bath water. that's where the opportunity could be. >> had an upgrade on tiffany after the last quarter. i'm not as big of a fan of tiffany, but coach has had a remarkable resurgence. kors is front and center. take a look at the margins, kors, they are not complaining. they are not complaining.
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pvh, small business in china, but talking about the momentum is there. the good guys don't complain. okay. never explain and never complain. henry ford, which i know you may not have agreed with his personal politics, but boy was he good when it came to execution. yes. >> there's no -- >> there's no way to follow that. >> yeah -- about the other stuff. >> right. lindbergh and ford didn't deviate and phillip ross explained it best in his seminal discussion. >> meantime, mcdonald's a good one. after that disappointing july, global comps up 3.7, and in line with expectations, but sales in both the u.s. and europe were shy of forecast. com sales and emerging markets up 4%. pretty good beat in asia. the best beat in asia since january. >> i wonder what goldman is thinking about that downgrade at 85.
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i have thoughts about it. i think it's very important to recognize this was a beaten up franchise. you called the bottom when you were at the olympics. was he under comp? was thompson shaking in his boots? >> i didn't see any jitters, no. they were not obvious at least to me. >> and how about the fact -- i am interested that the dollar -- all the coffee is a dollar this month. you know that because you go as much as i do. and i would have thought the u.s. would be slightly better because of the dollar promotion. i think it's hurt dunkin. mcdonald's is back, not bigger than ever, but mcdonald's is back and the evaluation is lower than it is in yum, which if you're worried about burberry, they could be traded together. remember, people get married at kfc in china. >> not burberry. they've got factories that produce handbags left and right, it's just they haven't checked off on them.
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but i think that mcdonald's surprised people. there were a lot of people who downgraded it over and over again. and, you know, it didn't take much. >> still some worries about germany and southern europe, which are offsetting anything that's going right in the uk or in france. >> fxe at 127, they were using kind of a 123 model, fxe being the euro. suddenly going to start hearing if the euro stays up here, you know what? we were a little too negative on the euro and the translation could help. >> just a push back a little bit, though, in terms of mcdonald's and the comeback part of the story. the u.s., highly promotional in terms of the coffee giving away for $1. we didn't see same-store sales based on the highly controversial activity, do we need to be concerned they'll have to go farther into the promotions in order to -- >> mcdonald's have been missing in the u.s. really hideously. i think that what you've been looking for here is everyone wanting everyone to give up on mcdonald's, well, that's pretty
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much happened. and for two, mcdonald's to start doing the number and beating the number. with currency beat the number. mcdonald's is not expensive. i think it can run to new back -- to old highs? no. there was a sense that mcdonald's has lost its way. these are not lost its way numbers. >> okay. we are one day away from apple's big event where the company's expected to launch the new iphone after hitting new all-time highs of $683.29. and apple did reverse, closed down more than 2.5%, stocks moving higher in the pre-market. great chart today in the most accessible of all newspapers "usa today," looking at how the stock is traded in advance of the last three product launches, jim. the consistency's remarkable. >> i love the fact that the articles all say that the iphone 5 has nothing to it. >> it's evolutionary as opposed to revolutionary. >> so suddenly everyone knows what apple's up to? how evolutionary was the -- remember when the ipad came
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occupant and there were jokes about tampax? >> yes, there were. >> there was a gap between when they introduced it or as a product and when you actually get your hands on it. then when everybody got their hands on it, it was in april of that year -- >> no one could figure out what -- >> no, they loved it. >> 70 million sold. i will point out this, it's really terrific when a stock goes down 20 ahead of an apple launch because it takes out a lot of the pizazz. there were a lot of technical trading in the reversal in that whole -- >> yeah. >> i believe from what dan hesse has said over and over again, which is sprint is a remarkable stock, the phone companies have to stop subsidizing this, because it is the phone people want. remember nokia? didn't they have a new phone? >> last week. >> the fire fly. >> you don't have to plug it in. that's the greatest thing about it. hold it near an outlet. >> well, great.
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okay. good. the zoon was much better than the iphone. >> oh. >> there is no gain, only zoon. >> you've got to wonder the run-up in the product launch and the selloff afterwards, that's simply because the trading pattern is so well known at this point that it's simply taking place earlier because people know what it does. and three of the past five product launches, the stock was up more than 6% in the two weeks prior to the launch, and in three of those events, the stock fell more than 2% the week after. what did we see yesterday? what's known as a bearish reversal. stock went to an all-time high, closed lower than friday's low, and that typically not good, but here we have a stock hanging in there. >> true. and i would say that i remember when the 4s came out and they would have called it a 5 if it was the needle mover, and the thing blew out, which is why everyone's still struggling with
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mobile. facebook hasn't been mentioned in close to 72 minutes in my own jargon. i like the stock -- i fully expect people won't sell it again because they are familiar with the trading pattern you mentioned. also, people have to sell stock everywhere in order to buy aig because we do not have $15 billion sitting around to be able to $18 billion, whatever, i think it'll end up being $20 billion. >> right. >> but i do like the fact that the expectations are low. that's what's so necessary when you have a phone that was so on the drawing board as i understand it when steve jobs was alive. >> if that was the case, they were quite a few years out. they were talking about a television, which is why we continue to hear so much about it. >> right. well, let's talk about what's going to happen this afternoon. facebook ceo mark zuckerberg will give the first interview since facebook went public a few months ago. michael arrington will conduct
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the interview with zuckerberg. shares are down more than 50% since the ipo price of $38 a share. and you know, it's been seen this is a friendly audience. going to be a friendly audience. particularly the place where new products are announced. who knows if the questions have been prevetted by mark zuckerberg. we don't know. >> -- what you get from advertisers in mobile. i saw some numbers for the last six weeks. there's just not getting much. they're doing that kind of stealth advertising on facebook. and what we need to hear from zuckerberg, frankly, is something like what google got to do. which you would hear google and suddenly they would have this shocking new thing you hadn't expected. and we need to hear from mr. hoodie that there is something that facebook's doing that is like holy cow, i cannot believe a holy cow moment from facebook. we need one. >> what is a holy cow moment
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from google? >> the android. i didn't expect them to be able to take the smartphone world by storm. i didn't expect it. and it's really worked and people are underestimating it. >> yeah. >> we've talked about apple iphone, but android has been a huge success. >> no doubt. >> i didn't see that coming. >> you're more interested in hearing about mobile than the ipo or insider selling or peter teal or anything like that? >> well, here's what he's going to say, i pass, i pass, he had to do, oh, it's not my fault. there, there i did that part. but i would love to hear listen, we see it coming down, but we have the antidote, you're not going to believe what we have in the pike. >> do they have it in them? >> do they have the goods you mean? >> i'm going to say they do. i just don't think they're a complete bunch of idiots and moro morons. i don't see them being total
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hacks. coming up next, a special early edition of cramer's mad dash. find out if the stocks are ready to rise and shine. and an exclusive interview with barrick gold. and let's take a look at how we're setting up on this 11th anniversary of 9/11. green across the board for now. much more "squawk on the street" straight ahead. maybe new buildings? what about updated equipment? they can help, but recent research shows... ...nothing transforms schools like investing in advanced teacher education. let's build a strong foundation. let's invest in our teachers so they can inspire our students. let's solve this. that bringing you better technology helps make you a better investor. with our revolutionary e-trade 360 dashboard you see exactly where your money is and what it's doing live.
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12 minutes before the bell,
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cramer's mad dash. watching aig, a sell order this morning. >> 553 million shares. this is a gigantic deal. we've been starved for deals. the merchandise is what i call tight as a drum. there were many buyers who were cut back which was extraordinary the size of the deal. don't forget aig itself is buying -- is buying a gigantic -- one thing i would point out, after this, the issue is no longer the discussion the overhang of the government. the issue will be how they're doing .58 times tangible book in a tangible book realized when they sell assets. carl, i think this will be a major piece of business people are going to talk about for the next few days. because if that deal holds, that's going to signify a new level of confidence even with the german supreme court, even with qe-3 on the horizon. >> all right. >> major, major, major. >> you've been touting bristol myers for a long time, goldman puts it on the conviction buy
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list. >> they said they spent enough time in purgatory after the disastrous hep-c. i like it it's got good yield, undervalued, lily is the most expensive stock in the group. it's not all rosy for bristol-myers. >> yeah, i love the way you say that. >> well, it's the old trading desk, people would call it that. all right, i'll top that. >> five below. >> all right, five below, by the way, is not a chain of recreational equipment, this is a store that sells goods for five and below. i thought the quarter was good, immediately the shorts came in and blasted it down to 31, they did 8% comp store sales numbers. i like it. the comp store sales numbers as good as michael kors? no, but i think five below being thrown out simply because they did a much better than expected number is shortsighted, i like it. >> all right. we'll talk about a lot more names after this short break. >> thank you.
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>> by the way, tomorrow on "squawk on the street," an interview with the man whose name is behind a red hot company, fashion designer, michael kors will join us. we'll be right back.
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all right. welcome back. at the top of the show we mentioned moody's. as part of an update on the u.s. government debt rating by which we share some of the headlines and come back at the top of the hour. in moody's saying that its negotiations specifically about the u.s. government's budget produced a stabilization and then a downward trend in the
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ratio of federal debt to gdp over the medium term, the rating will likely be affirmed and the outlook returned to stable. remember, of course, right now moody's has it on a negative outlook, that is, for the u.s. government. they also go on to say, however, negotiations on a budget fail to produce such policies that would, in fact, produce stabilization. moody's would expect to lower the u.s. credit rating. we're revisiting it again, moody's and u.s. credit rating, something we dealt with last summer and watched the yield on the ten-year promptly plunge once they worried about. >> and equities too. >> yep. >> literally was one of those moments where everybody -- the vast majority of people had it wrong. and it turned out to be the bottom in the stock market of great opportunity. >> we should point out, however, yet again a great deal of focus will be on the u.s. congress and whoever is in the presidency next year in terms of producing some progress on all of the fiscal issues, including
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dealing. >> david bianco is looking for 5% to 10% in the near term, over at b of a, looking for her year end target of 14 to 15. limited upslide because of issues just like this. >> yeah. >> we've had such a great year. >> seemed like a great year. it's been a terrific year for the stock market. and my question, those all make sense, but there are mechanics behind all stock markets. and one of the key parts of mechanics, there's so many funds that have not met the benchmark. it is really hard to be on the sidelines and meet your benchmark. and so i think that they make sense theoretically. in reality, the machinery that is the money market, money-making business may keep stocks more aloft than you realize. >> if you get a downgrade, you have to wonder if the reaction in the markets will be the same. because last year when it happened on a relative basis the u.s. looked great, this year may
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not be the case. >> no doubt. >> we are coming up on 9:25 a.m. eastern time when the new york stock exchange will have to observe a moment of silence to remember the thousands who lost their lives in the 9/11 attacks which occurred 11 years ago today.
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moment of silence here at the new york stock exchange commemorating the 11th anniversary of september 11th. and of course, the impact here on the floor, tremendous. because of the proximity to ground zero. most of these traders were here 11 years ago when the first plane hit. well, meantime, we've got the opening bell straight ahead. a .
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the markets in this country continue. and here it is. the dow -- the s&p 500 on the big board. organizers of 9/11 -- and the mission continues. a tribute today to those who lost their lives. over at the nasdaq, the organization tuesday's children, september 11th family associations, the nypd, of course, all remembering 9/11. meanwhile, talking some markets here, jim, we knew this week was going to be backloaded. man, is it going to kick off tomorrow, beginning with apple, getting to the fed, the german court is going to rule tomorrow. even though some doubted that was going to happen. there's been a lot of chatter about whether or not you start to sell as this news flow begins to break.
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>> strong, good sign. gold not going down, good sign. meaning that these are signs that there could be -- what i want to see out of europe is a sense that the euro will be embraced and reflation coming. >> the euro, by the way, still strong, the only sign of resistance for the euro sitting at 1.282 for u.s. dollar was the average 1.24. seems to be hitting up against that level, not able to break, but certainly able to hold on to the four-month highs even after the ecb meeting last week. and that could be seen as a victory for people who want to see the environment. >> i don't know how much the euro traders really know. but i know if there was far more concern about the german court, i would expect them to be doing a little bit of rolling over. now, we know things are raw. listen, the employment data, we got that wrong. there's a lot of conventional wisdom that says be careful. but you've got the three that i follow, gold, fxb going the
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right direction. and i don't believe these are anything other than the events we get through. people are looking for a big selloff. no one believes in the rally still, and yet the rally is based, i think, on cds. have you seen the new cd rates if you roll them up right here. >> i was in texas over the weekend, big billboard and it said you will not believe this rate. it had the numbers you can change, 1.2%. you won't believe this rate. >> i've got to get that. the heck with getting that dividend, i can get 1.2% on my cd. look, this is a major issue for americans. we've been reading a lot about it there's no way to get income. well the, the way to get income is to buy income-producing stocks. a lot of people thought was a big bubble. that has been proven wrong over and over again. a bubble in companies that have good balance sheets that offer income, is that really something
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that is a tool? >> when we add up the profits from t.a.r.p. that have occurred on a lot of -- >> t.a.r.p.'s a failure. >> we do have to remember there's been an enormous penalty. that's something you can't really calculate, but it is huge, huge number if you were to be -- >> they stick with these bond funds. some of these bond funds are already starting to roll over. >> yep, and we pointed it out many times, people have moved into bond funds, away from equities, and they really do take on a great deal of duration. >> explain this, people don't get what that means. like duration is not an amount of time. >> right. >> it means simply if rates go up, you are losing. that's really what it means. >> i think that's important also. aig, look at this thing. this is one of the biggest deals in the world. like i said, people are cut back. and they didn't get their
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allocation? please, please, how often does that happen? >> not very often. not very often. there were a lot of reversed inquiries meaning there was demand, underwriters were aware of it when they went to the government and said guys, what are you thinking about? they were aware they had a lot of people who wanted the shares. >> doesn't this smell like someone came in and said, listen, i want, i want to circle a gigantic amount of stock. this is not just little guys coming in. someone's coming in here and saying, listen, give me 50 million, i want 50 million shares. there are big guys that can't go like this unless giant buyer's coming in saying give me 50 million. >> i want to hit a headline, if i can. we've been waiting this morning for the firm that is determining the value of morgan stanley/smith barney because they've been trying to reach a deal which is their right in figuring out how it was going to pay for 13% of the firm, $13.5
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billion is the valuation. that press release just hitting now. and so that is where they come in at $13.5 billion. i'll have a lot more on the report. >> below of what it had been. >> well, citi put it at $23.3 million. morgan stanley put it at $9.5 billion. >> i think it was like 16 and change -- >> but you've got to remember, it is not a -- it's not a controlled premium price, a fully distributed trading price as of june 1, by the way, when the s&p was a good deal lower than it is today, the comps available for the likes of raymond james, $13.5 billion is high too. but they're going to buy 14% of that, and we'll have more on it in a little bit. >> yeah. >> morgan stanley's trading up. >> yeah. >> citi, though, will have to have a write-down of the significant size.
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they're carrying this at $23.3 billion. they swore they might have to have a write-down and that'll be a fairly significant one. >> over the 2008/2009 period, one of the things that kept the market from moving up was the citi corp. write-down. it was the serial write-down. they must have had more write-down -- in terms of the write-down hall of shame, citi has just dominated that whole annex. >> they did. that was from the holdings of cdos. this is a little different. >> right. >> a lot of people involved. a lot of fingerprints on the people who got that wrong, citi. >> i wanted to briefly point out google, testing $700 a share. the reason i bring this up, it's a very large weight in the s&p 500 is actually the 12th biggest stock on the s&p. it looks right now to be overextended. this has been a big reason why the s&p 500 has outperformed the dow over the past 13 weeks. in terms of performance above the 200-day moving average, it is trading above the 200-day
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average as it has a few other times in the past where there were intermediate props. they're saying the outperformance points to potential breakdown, may have seen the top. i don't know what you think. it's kind of a monster run. >> i know they do have european exposure. obviously, the big benefits, suddenly they don't have -- what do you got? >> nothing, it's only 14.5% of $13.5 billion. >> good catch. let's get to bob pisani here on the floor with more of what is moving today. >> hello, want to bring you up to date with what's happening at knight capital. presenting at the financial services conference this morning. and one little piece of news he's brought in for us, it is ibm, they announced that this morning. they were hired and brought in as of august 27th. this will probably take a couple of months for them to actually
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come to some kind of conclusion about what was going on. but the fact they chose ibm, highlight the idea this was a software problem. we've already known and i've done an interview with tommy already known that software was incorrectly installed. and essentially awakened dormant code that sent out erroneous orders. now ibm is figuring out how to improve the overall process. we'll hear more about it in the next few months. tommy says for the firm muted, that's the phrase they're using. they went up about five points as we got word there's not going to be any delay in the german constitutional court ruling. that's important, that doesn't mean it's not going to be problems. everyone believes the german court's going to uphold the constitutionality of the bailout fund. what people are worried about is whether they're going to impose conditions that's going to make it very difficult for the germans to go into future bailout agreements.
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for example, they might say you're going to have to have a kind of constitutional amendment to get any closer on european unification at all. that could be a real problem. so you could get them approving it and the market moves down if the conditions impose are particular owners. take a look at what's going on in the last few days. there's a lot more interest in financial stocks, in material stocks, in energy stocks, less in the consumer stocks recently. see this morning, coal stocks are up again. the most hated group of all the sectors are up today. we saw european banks, for the most part, generally up. so the big question is, it's very clear people believe that the ecb is influencing the stock market. but what's not clear is whether or not we're at some bottom for the earnings trough. there's a lot of debate whether the q-3 is the bottom of the earnings trough. i refuse to believe that when you look at what's going on with the luxury retailers, i think that's not likely. i think you've got a big debate between people saying we're not going down the bottom of the
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earnings trough and other people say we're going to do it right now. so i would note here that we're pushing up against the limits, david, of the trading ranges. your average strategist has 14.25 for the end of the year, we're at 1,430 right now. so a lot of people are bumping up against their limits. not surprising to see people saying the market's having very little upside from here. i think you'll see more people arguing that we should take a little bit of money off of the table. guys, back to you. >> thanks very much, bob pisani. i want to get back to the story that hit a little while ago. give you a little more detail on what's going on. morgan stanley and smith barney have reached an agreement based on an investment bank in terms of what their joint venture is worth. $13.5 billion is the number. that is essentially the determination on what would the fully distributed trading price
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of this firm be were it a public firm of june 1st, 2012. the s&p with 1,278 on june 1st of this year. how did they do that? figuring out the comps, whether it's raymond james, perhaps even a blackrock. now, what's interesting here as well as part of this agreement is that morgan stanley will immediately buy 14% of the firm, it already owns 51%. and they already reached a deal under which with respect to the remaining 35% of the firm that is owned by citi, morgan stanley will acquire it by no later than june 1st, 2015 at the implied $13.5 billion valuation. there you see the language in the press release. that's important. >> they're not going to have to go through this again. >> i'm telling you, it's been a little in both stocks. >> in terms of what's it worth now? >> so we know. >> $13.5 billion is the number, they'll complete the purchase
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and own 0%. i'm sure they're going to call it morgan stanley by june of 2015. and you know, people think of morgan stanley, of course as a global investment bank perhaps not as often as the largest single brokerage firm out there, but that's going to have to figure into their equations on that. by the way, we should point out that does not include wealth management that $13.5 billion, don't want people to get confused, global wealth management is a separate entity at this point. >> and still nowhere, right? book value. the meaning to all this is valuation, the tangible books is way -- the market's saying it's way overstated. i'm not saying that. >> right. i want to point out this was i'm told now negotiated by the firm, the $13.5 billion, not from the aid of weinberg. it would have been nice if they were able to communicate with me or put this out in a timely
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fashion, but we do the best we can. thank you for your cooperation. >> not going to be -- not worth going there. >> we'll see what citi has to do in terms of marking down where it has this thing valued. it was at $23.3 billion on the 16th of july, we learn what both sides were and they would go to a third party arbiter, apparently they came to an agreement on their own. morgan stanley had it at $9.5 billion, so a huge discrepancy in their values, ended up at $13.5 billion. >> you have win/win for both? >> i guess. they're going to sell it, we know it's going to be out. morgan -- >> stanley going up. >> yep. all right. >> coach not really down, tiffany, people are figuring that burberry and the $500 raincoats are overvalued. >> yeah. >> i bought one. what do i know? hey, said it was down for sale. >> back to you guys. >> it was a bogo. do you know what bogo is? >> no, what is bogo?
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>> have you ever shopped? buy one, get one. >> buy one, get one. >> let me take you shopping once. >> that would be an amazing segment, cramer takes him shopping. >> i can tell you, i can blow you away with the way i handle my shopping. i will -- >> i will do that with you one day. >> all right. enough said. prosecution rests. all right. let's get to bonds and the dollar. rick santelli at cme group in chicago. >> hi, jim. well, august 1st was the last fed meeting, today's the beginning of the two-day fed meeting. tomorrow we'll get our press conference and our statement. if you ask ten people what it says and it means, you get about 11 opinions. there's some things we can quantify with charts. since the last meeting, august 1st, here's what interest rates have done. the ten-year note yield and i
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find it fascinating the midpoint of the range is within a basis point or two of right where we're trading at 1.67. if you look at the ten-year spread, many are looking for yield curve movement, steepening curve here on the broad-based central bank activities. at around 1.42 is also very close to the midpoint of the range since the last meeting. here's where we really can see the fed influence. here's the dollar index. looks like it's down about 4% since the last fed meeting. and, of course, the gold contract has a lot of dynamics going on. not the least of which is the dollar, which is affected by the fed. and you can see it's the mere image of that dollar/index chart. carl, back to you. >> okay. >> all right. thank you very much, guys. we're honored here today to have former navy s.e.a.l. and ceo of the mission continues. deployed four times during the war on terror.
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after returning from iraq, he founded the mission continues. thank you for being here. >> it's great to be here. great to ring the opening bell this morning on behalf of all of the veterans who served in this generation. to let everybody know we're moving forward. >> everybody's sharing memories of that day, even 11 years later, you want to share yours? >> you know, for me, on september 11th, 2001, i was in the navy s.e.a.l. training, we had come out of a 2-mile ocean swim and as we were running up the beach, somebody ran down and told us that planes had hit the twin towers in new york. and we knew that day our whole world had changed and a class of navy s.e.a.l.s was going to war. >> it wasn't an impetus for you to enlist, you were already going. but it must have stiffened your resolve. >> it stiffened my resolve, the resolve of navy s.e.a.l.s and people throughout the military who knew what we had been called
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on to do, the time was now. >> and talk about the mission continues. the mission is essentially to give post 9/11 veterans a way to either find a full-time job, right? >> yes. >> go to school. >> yes. >> find a permanent role or service, how does that happen? >> what we know is we have an incredible generation of men and women that are coming home. they've served their country overseas and they want to continue their mission of service here at home. what we do at the mission continues, we create opportunities for veterans to continue to serve and continue to inspire in communities across america. they work with habitat for humanity, the red cross, and today we've got 1,500 volunteers who are working in projects in six cities around the country and our partnership with the folks at 9/ >> where can people donate? >> go out to and at, they can find out about what we're doing with this generation of veterans. and if they want to get involved today and on 9/11, go out to 9/ and learn more about what we're doing.
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>> right there on that shirt. it's never easy coming home, but for these veterans, giving all the challenges they've gotten in this economy, every bit of support helps a lot. eric, thank you for your time. >> you're very welcome. >> on this 11th anniversary of 9/11. we will be right back. with the fidelity stock screener, you can try strategies from independent experts and see what criteria they use. such as a 5% yield on dividend-paying stocks. then you can customize the strategies and narrow down to exactly those stocks you want to follow. i'm mark allen of fidelity investments. the expert strategies feature is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.
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welcome back, i'm sharon epperson at the nymex, we've seen a significant rally in natural gas futures over the last two days. some traders saying it's because we're getting a small injection number when the data is released on thursday. also, keep in mind, there have been some key technical levels breached. we've seen a low in natural gas, and of course, with under $3 gas, that makes it a price that a lot of folks want gas instead of coal. we're also looking at what's happening elsewhere. the market, a little bit of a breather here. although oil, gold, copper, all getting a little bit of a lift from the stronger euro, but of course, all eyes on the german constitutional court tomorrow and on the fomc on thursday. back to you. >> thank you very much, sharon epperson. taking a quick look at the markets here. in the green across the board pretty much, although just fractional gains. again, some things to watch, the
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euro, 1.2835, just crossed the 200-day moving average. and we are seeing tremendous strength across the sector in banks. the banking sector, it doesn't show it, but you take a look at citi, goldman sachs, morgan stanley, jpmorgan, barclay's, all higher today. >> and your favorite, wells fargo. >> well, wells fargo did not say the right thing at the conference yesterday. i think it's a major opportunity, but obviously people do not like what they're saying. i do point out that, can you imagine the amount of stock that was sold to pick up aig from this group and how the remarkable resurgence of this group. there is a bid under the banks and it's almost as if it's related to the fxe. almost as if this is one-for-one with the euro, like it or not, and i've got to tell you -- >> so much for decoupling. >> it's nuts, but yes, so much for decoupling, thank you, that's really the take away.
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will you stop it? >> day can't go by he can't say that. >> 2.5%. >> what's olson doing? >> the key to this market. >> i'm not going to tweet that. i'm not going to tweet it's the key to this market. >> -- key to this market. >> i'm trying to be -- but aig remains as i said a major focus because how could you be cut back. how could you not get all you wanted of that stock? they priced it well, the treasury did a fantastic job, really great article from our colleague andrew ross-sorkin today totally taking on the critics. >> sure. >> another bold, outspoken about t.a.r.p. >> he's fearless. he takes on all the icons. >> when i think of fearless, i think of andrew. >> in the best way. >> yes.
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>> we'll get to it after a short break. when you take a closer look... the best schools in the world... see they all have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level. let's develop more stars in education. let's invest in our teachers... they can inspire our students. let's solve this.
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at u.s. trust, our expertise extends well beyond investment advice and research analysis. it includes proprietary offerings like our eldercare program, which helps provide for those who came before you. and our financial empowerment program, which helps prepare those who come next. resources like these have made us the number-one trust company. that's why generations of families have come to us to help build their own legacies.
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we'll start with natural gas. >> they also like range, and they like southwestern. they're low. >> all right, clean energy fuels. >> if you think natural gas is coming back, they make the gas stations. >> credit sweiss raising the target for walmart. barclays on amazon. >> amazon is a horse. a lot of people think it's overvalued. listen, it's been overvalued since getting published. >> ubs citing slow growth. >> like, hello, yes. >> and finally, bernstein, since asian growth may come back to starbucks. >> well, this will be incredible. if this happens, there'll be a lot of growth. may i point out that chipotle's up $50 from the bottom and
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starbucks hit at the same time as chipotle. >> what's tonight? >> okay. i -- look, i've got to tell you, i am fixated on gold. fixated. a royalty play on gold. i want to find out betting on gld, and i focus on real estate investment trust. no one can find yield. this is the yield 6%, and the reits have been fabulous performance. when you open your checking account, remember that? i once had a toaster -- i'm not kidding, i got a toaster from citi. they used to give you toasters. >> you probably kept it too and used it. >> it got stolen. >> we'll see you tonight, jim. when we come back, speaking of gold, the ceo of barrick gold, his first tv interview since taking the job. how concerned is he about the slowdown in china? don't go away. bob...
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oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. ow save 50% on banners.
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welcome back to "squawk on the street." it is a day of remembrance here
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in honor of 9/11's memory. we'll be joined by the developer of the world trade center, larry silverstein. and mcdonald's same store sales in line with u.s. and europe came in short of forecast. how much will the restaurant chain's promotions and new menu items cut into profit? >> plus, mark zuckerberg getting set to take the stage tonight. what must he say to turn the tide for investors? >> and we'll be joined by shawn matthews on his charity event. trading for charity and much more. we had some breaking news not long ago. mary thompson also has more for us on this deal reached between citigroup and morgan stanley about their joint venture. morgan stanley, morgan stanley will take control in full ownership by at least june of 2015 if not sooner. >> exactly, david. we were focusing on one of my questions was what kind of
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write-down citi would have to take. by cnbc's calculation right now, the write-down on their 49% stake in morgan stanley/smith barney will be $4 billion pre-tax. by cnbc's calculation, that's the size of the write-down they're expected to take. you might recall earlier this summer, they submitted a filing to the sec saying because the two sides were so far about on the valuation of the joint venture that it would likely have to take a write-down in the feature, and on a pre-tax basis it likely would be $4 billion, but again, awaiting confirmation from citi. back to you. >> and of course, 49%, they had it at $23.3 billion, i believe in that filing and morgan stanley was somewhere around $9.5 billion, they end up at $13.5 billion, and we can figure out kind of what that write-down will be for citi. thank you, mary thompson.
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meanwhile, breaking news, more breaking news, let's get to eamon. >> reporter: and good morning, simon. we're standing outside the national press club where there's a press conference ongoing. an astonishing moment here, attorneys for the jailed former swiss banker are announcing that he has received a reward from the irs for his role as a whistleblower in turning over information about thousands of american tax who had money hidden in secret swiss bank accounts. bradley birkenfeld spent 16 months in prison. he's under home confinement, and he could not be here for the announcement that he has received an award of $104 million for his role in turning over information. his attorneys say they believe this $104 million whistleblower reward is the largest reward ever given to a single person in
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the united states as a whistleblower. he spent those 31 months in federal prison. he's now under home confinement in new hampshire. and his attorneys say the information that he turned over led to ubs paying that fine of $780 million, and also to $5 billion in back taxes being received by the u.s. government as a result of information birkenfeld turned over to the u.s. government on thousands of americans who had those secret swiss bank accounts, guys. this is going to send a big message to other potential whistleblowers that there's big money to be made in turning these over. >> he's awarded for what he said, on the other hand, he's in jail because he didn't disclose enough. two sides of the law. >> because he didn't -- that's right. the same federal government that put brad birkenfeld in jail for 31 months is now about to hand him a check for $104 million. and the irony is palpable here.
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birkenfeld not able to attend the press conference because he's on probation and home confinement. >> thank you. well, waves of sale hitting high in retail after burberry warned the full year profit will come in lower than expected. cnbc's robert frank has got the details. robert. >> thanks, melissa. well, i've been warning of a luxury slowdown throughout the summer. and the reason is one word, that's china. the chinese wealthy, they've filled the gap in the last three years that was left by the americans and the europeans. china is now the world's second largest luxury market behind japan, spending $12 million a year on luxury. that may be slipping. those high rollers aren't rolling like they used to. we started to see it in the spring where we had disappointing wine auctions that sprung to different ticket auctions. sales fell 43% compared to last year. if we also look at the luxury
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cpi, prices of living large in china, those prices grew at half the rate of last year, that's the slowest growth since the crisis of 2009. for instance, the price of a golf villa in shanghai, that's fallen 7% this year to $3 million. now, some of this, of course, is due to the slowing economy, but it's also a political backlash against luxury and the wealthy in china. the chinese word for luxury is now banned on billboards. and a chinese blogger recently became famous when he posted pictures of government officials wearing luxury watches despite their modest salaries. now, many of these rollex wearing officials are under investigation. when luxury literally can get you arrested, it may be time to re-think the chinese luxury boom. >> thanks for that. well, 11 years after the world trade center attacks, the replacement towers are taking shape. the most prominent building, one world trade center, also known as the freedom tower is scheduled for completion in 2014.
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it will be the tallest building in the western hemisphere. the president and ceo of sill silv silv silv silverstein properties. this is a professional achievement for you. but what also cannot be lost is the symbolism of this building. able to open in 2014 as the tallest, not just open, but as the tallest in the western hemisphere. >> it was originally thought it might be the tallest in the world. that's long been superceded by others. it's a time -- it's a day of great remembrance, recognizing what happened on this day 11 years ago, the loss of so many lives. we lost four employees with a total of six children among them. and so that's a very difficult loss for us. it's something that continues in our lives, something we can't part with. the reality of our circumstance. and so there's a day of great emotion. and being there this morning as
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we have for the last 11 years has not been an easy event. >> then we get news today that mayor bloomberg, governor christie, under the wire, but managed to get some sort of agreement with regard to the museum where construction will continue. >> that's an enormous positive. having that accomplished. tremendously beneficial because now that will go through to completion. and i think by the early part of 2014, that should be finished. totally completed. the memorial park completed in every aspect. it'll be a memorial and museum to what transpired on 9/11. >> how do you feel? you, of course, famously just signed the lease for the world trade center in the july of 2001. i mean, it is through circumstance that you have had so much of your career locked into the world trade center and
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the rebuilding. how do you feel about that? it's come to dominate your career almost by chance. >> it's become the passion of my life. my business life to complete the trade center. and originally i thought it could be done by 2011, that was not meant to be, but i would say by 2016, 2017, everything should be done. all the buildings should be completed, and it will be a -- it will really be a development. the quality of which will be unique, certainly in the western hemisphe hemisphere. the buildings will be spectacular. they're all done by iconic architects of world class quality and the designs of world class iconic building. >> some might be concerned about the cost overruns on the public side of the project and the way in which that has to be charged out. the big figures we're talking about here perhaps inevitably. >> unfortunately, these things -- these things develop.
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it shouldn't be, and cost overruns are really not acceptable in the private sector, but it seems to happen otherwise. >> yeah. the port authority is spending an awful lot there. you know, larry, i am curious, incredible resurgence has taken place downtown, one we might not have been able to imagine on that terrible day 11 years ago. but specifically to one world trade center and your ability to attract tenants, where are you on that? i know an important potential anchor tenant in the building. but where are you going to be in terms of occupancy? >> first, to set the record straight, the port authority is responsible for tower one, the former freedom tower. and they're moving that forward. with a co-venture who is focused on the leasing of that building. and that building today is about 50% occupied. it may be a little bit more than 50%.
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but not a doubt that building will lease in its entirety once it's up and once it's completed. it's first class real estate and the space is good, there's no reason it shouldn't. >> 7 world trade -- >> 7 world trade center is finished. we've topped out tower four. that's up at 72 stories. that will be finished the last quarter of 2013 of next year. and that building is now 50% occupied, and leased. and i suspect it won't be terribly much longer. probably in 2013 we should proceed much, much faster in terms of lease-up of that building, as well. >> are there premiums in comparison to other places in the new york city market? >> it's about 20% behind midtown in terms of rents. but clearly, from the rent achievements at world trade center, that seems to be changing. and i think it's just a question of time.
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the quality of what we're doing down here will ultimately narrow that 20% gap. quite substantially. >> in residential, starts have been good, prices going up again, but commercial architecture buildings are not very strong. is the future of commercial anywhere near as good as the future of residential? >> you know, new york is an incredible place. for residential as well as commercial. because the world class city, and money finds its way to new york for investment purposes, for people what stability, growth, dependability, they put their money here. these buildings are today going for premiums that unprecedented in terms of cap rates. the prices are way up, the cap rates are way down. and the value of these buildings continues to soar. there's no doubt in my mind. new york being the city it is with the diversity of opportunity will continue to attract business from all parts
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of the globe. and will continue to prosper. and so you have these setbacks every once in a while. still recovering from the meltdown of '09, '10. but clearly we've done much, much better than many other parts of america has done, and i think we'll continue to succeed in that regard. i'm very optimistic. >> thanks for coming by. larry silverstein, silverstein properties. >> jackie is back at headquarters. >> i'm watching shares of sirius xm radio and downgraded to a sell from a hold saying the shares are priced for perfection at this point. also saying with that 38% year-to-date run-up, the price has outpaced the fundamentals. take a look at that chart. down today 2 cents. $2.50 stock. we'll work our way through what mcdonald's has reported this morning in terms of sales around the world. and one analyst will tell you
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why he thinks there's more than 10% upside in the stock. and more than a 3% dividend. [ male announcer ] the 2013 smart comes with 8 airbags, a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety. [ male announcer ] the exceedingly nimble,
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bouncing back last month after a disappointing july. but sales in u.s. and europe come in short of forecast. up 40 cents to 91.70.
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with us this morning is the equity analyst and morning star's global director of consumer educate research and retail analyst. guys, good morning to both of you. >> thank you for having me. >> jim, someone who is in a bit of an argument early on this morning as to whether or not this was a miss or not. is it? >> i guess it hit my numbers. maybe i lower the expectation after the disappointing july results. but so mostly i think i was relieved and shows that, one, overall sales globally sales need to continue to grow. tough economy, and two, that mcdonald's to continue to maintain or slightly grow its market share. we are relieved and pleased with the results. >> r.j., why the underperformance in the u.s. relative to everywhere else in the world? >> yeah, i think what you're saying is more competition from some of its, you know, peers
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that have the company the past couple of years. burger king becoming more resurgent, you've got that, and also a little bit more of a shift toward the dollar menu, which will have an impact on the overall ticket size. that's why we're seeing the underperformance there. and you really are dealing with a choppy consumer spending environment. so i think chalking up all three of those factors is what you're seeing in the numbers. >> if it took competitors to step up the game in order for mcdonald's to start missing here in the united states. what will mcdonald's force to be done? and will that be good from an investor standpoint? how much will they have to give up maybe in terms of margins in order to get those customers back, for instance? >> you know, i think it's a combination of being more aggressive on the dollar menu. they will give a little bit on the margin side and we have near term caution on that particular point. but i also think they have a pretty nice product pipeline shaping up for 2013, which gives us excitement, and it's one of the reasons why mcdonald's is one of our favorite medium term names in the space.
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we do have some caution based on more difficult comparisons that show up in the fourth quarter as well as the threat of higher food costs that are going to pay out early next year. >> we should point out that with 104th on the price target. jim, we hear again from r.j. about food costs. actually the flip side of this is that we have a very weak labor market in the united states. so for as long as we're not getting employment quotes, there's no pressure on wages. let's be honest about it, it's good for stocks like mcdonald's. >> well, i think the food costs slightly more than labor, but i think that food inflation tends to be a little bit higher than labor cost increases. so overall i think that, yeah, we do see higher food prices because of higher grain prices in 2013. but that's partially offset. overall, i think the margin will be pressure and therefore we do agree that there's some near-term pressure on margin. however, we think there's, you
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know, some, you know, issues near term, but longer term we like the company, and we think those companies are very attractive. 16 times next year's earnings. we think are long-term growth potential. >> r.j., you mentioned the pipeline which has been a mystery to some investors. you know, what comes after mccafe, what comes after coffee? extended hours. could you be more specific about what 2013's going to bring? >> sure. i think i like what they're doing right now in terms of the mcwrap product, which is a natural extension from the snack wrap product. it's a portable product, a higher end product being tested in the u.s. right now. we'll see the long-awaited release of a premium burger early 2013. that'll help, you know, set up a better barbell strategy with what they have on the dollar menu but also give them something to work with on the premium side of the menu. that's been one of the hallmarks at mcdonald's, the product innovation and taking innovations from other parts of the world. the recent mcbites program
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they've had starting in australia and rolling out in the u.s. and they'll find other products that can be integrated into other geographies at this point. >> r.j., you're cautious on mcdonald's, where would you rather put your money in the space? >> yeah, right now, i think starbucks is probably the best bet. it's got the best near-term catalyst we can point to. we like what they're doing in terms of channel development strategy. we think the at-home brewing system is going to be a major home run this holiday season. and really think that the worries about traffic in the u.s. locations have been overblown at this point. >> all right. we will see what happens. can't wait for that new premium burger. guys, thanks a lot. >> thank you. >> thank you. >> all right, mark zuckerberg getting ready for his first interview since the company's disappointing ipo. what can he say to appease investors? that's next. this country was built by working people.
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at u.s. trust, our expertise extends well beyond investment advice and research analysis. it includes proprietary offerings like our eldercare program, which helps provide for those who came before you. and our financial empowerment program, which helps prepare those who come next. resources like these have made us the number-one trust company. that's why generations of families have come to us to help build their own legacies.
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mark zuckerberg, the ceo of facebook getting set to make his first public appearance since the disastrous ipo. julie boorstin is inside with the controversial interview. julia? >> melissa, ceo mark zuckerberg picked this tech-heavy audience because the developers, entrepreneurs will be here today. they're more interested in his focus on product rather than problems on wall street. but even in this crowd of developers and sbreentrepreneur there is pressure to discuss the stock price which is down more than half since the ipo. because so many people are wondering what impact that stock price is having on employee morale, and more important, employee retention. we will have a live feed with tech crunch founder michael arrington so he is speaking to
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investors and wall street. we've told a number of top analysts, but they want to hear from zuckerberg, he needs to start showing he does care about the company's stock. they want more information about how the company will make money for mobile users, and also about zuckerberg's plans to reconcile making money and keeping users happy. saying that, "the perception on wall street is that revenue and profit growth take a backseat to user experience, and he has to reaffirm a commitment to balancing the two." zuckerberg and arrington take the stage at 5:00 p.m. eastern and we will have it streaming live on cnbc. >> thank you very much, julia boorstin. >> we'll have full coverage in full on "fast money" here on cnbc. and of course, our traders will be reacting live and giving you the trade as this interview happens. >> i still think you can get a short squeeze. you only have to have one product announcement. >> perhaps why we are seeing it up 1% on today's session.
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>> all right. well, we'll obviously keep that in mind. a lot to be questioned tonight. meanwhile, the cme, and the nymex preparing to observe a moment of silence to remember the victims of the attack of september 11th. we want to improve our schools...
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...what should we invest in? maybe new buildings? what about updated equipment? they can help, but recent research shows... ...nothing transforms schools like investing in advanced teacher education. let's build a strong foundation. let's invest in our teachers so they can inspire our students. let's solve this. oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see. you know, i'm glad we're both running a nice, clean race.
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about an hour into trading, some of the stories we're squawking about, 10:31 on wall street. ralph lauren down 3%, and among the high-end retailers falling in reaction to burberry's profit warning. the insurer's up more than 37% in the past 12 months. and the euro had some four-month highs above 28 on rumors, the ruling is due tomorrow. 11 years later, the firm has rebuilt itself and hosts an annual charity day to raise money for charities around the world. our own mary thompson is live. mary, over to you. >> hey, there, simon. we are here with the ceo of cantor fitzgerald. you, again, have turned a
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negative into a positive by raising money for charity. last year $12 million, can you give us a sense of how much you've raised so far today? >> it feels much busier today than it did last year. we're excited to continue to raise money for charities and build on what we did in the past. >> you give money to about 25 different charities, do you have a favorite? >> i'm on the board of autism speaks, and i have an autistic child, so that's one of my favorites, it's in my heart. >> great, you also have breaking news you want to share with us today. tell us about that. >> we've continued to build out our emerging market presence. we're about taking our global franchise and making it bigger and broader. there's a unique time and place where the bigger goo is are going to have to get smaller, the smaller guys will continue to have trouble to be relevant. and we're right in the middle and we can grow the franchise aggressively. >> made a couple of key hires from jeffreys to grow your
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emerging markets business. jeffries is one of those rivals in the space you occupy, how does it feel with those rivals? >> i think it goes back and forth. people are looking to monetize themselves in a different way than they have in the past. we're excited about the talent pool that's out there, we think we'll get our fair share. >> are you thinking more from the smaller firm to the larger firms right now? >> i think it's a combination of both right now. we're excited about big firms and there are a lot of really good people looking to move up, as well. >> talk about the importance of the emerging markets space because you said it's one you want to grow. where is it right now as far as the percentage of revenue? and where would you like to see it in five years? >> well, it's getting to be a bigger percentage of our revenue. a much bigger percentage as we go forward. so every second-tier bank had capital markets divisions. they're scaling back aggressively, are going to close those divisions means there's market share to be had. we're clearly going to grab that market share. >> i want to talk a little bit about the news of the day.
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moody's came out today and said that unless legislators come up with a plan to deal with the deficit, it is likely they will downgrade u.s. debt. this, of course, you know, roiled the markets last august. what kind of game plan do you think we have to put in place? >> from a relative value perspective, the u.s. is the place to be. the most liquid market in the world. you look at the liquidity very hard. i don't think it's going to have a major impact. we need to get our financial house in order. and that's what we're talking about. we can't kick the can down the road forever, it has to happen soon. >> everyone would like to see that. thank you so much for joining us today. we're coming to you live from cantor fitzgerald's trading floor and we've been speaking with shawn matthews. >> we were just talking about how they've never let up ever since that day. our congratulations to cantor for all their hard work. joined this morning by ubs director art cashin. good morning to you. >> good morning. >> if the market has an
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institutional memory here, at least, you're it. and it's a lot of discussion about that day today even the weather seemed to be exactly the way it was on that day. >> absolutely so. it was a very clear and sunny september. lots of hopes mulling about and then the first plane hit, and strangely people forget that just a week before there had been an accident where somebody was parasailing in the harbor and collided with the statue of liberty with no damage. the first plane hit and i'm sure people thought it was some amateur event again. and when we found out how serious it was. and i can remember mark haines broadcasting and pointing it out as it came along. very, very eventful day for all of us. >> here we are 11 years later, dealing with issues of the day. i see boehner's being quoted now as saying he's not confident at all congress is going to work their way towards some
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compromise. we're holding up in light of serious issues over the next 8 to 12 weeks. why? >> well, it -- i'm rather impressed. i think it may be the idea that there's almost no other place to put your money. i think they're coming down to that. you're finding that many of the fund managers are guilty of underperformance. and, you know, as you're coming to the end of the year, they're being reminded that the sign on the door doesn't say art the money collector, it says art the money manager. so get in there and manage it and do something with it. so i think you're seeing some of this is actually catch-up. but it's interesting that boehner would make that particular comment just on the day that moody's has threatened to downgrade the united states one more time. >> i wanted to ask you about the moody's threat of a downgrade. the last time this played out and there was a downgrade, the opposite happened to the markets of what people expected would happen. this time around, the scenario's different in what's going on around the world looks to be improving. the european situation looks
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like perhaps there's some resolution on the horizon, perhaps, and the u.s. on a relative basis may not be as clear the winner. are you concerned about the impact of potential rating would actually have this time around? >> well, it potentially could be far more severe. certainly in the short run immediately after they stated it, you could see the dollar weaken, you could see some concerns showing up in the treasury bond market. so there's a kind of believability. you know, it's the old idea of how many times you repeat the threat, you know. this, this, and now maybe it will have a bad impact on us. i think there is some real concern about it right now. >> you've been good at detecting early near term reversals lately. with the german court and the fed and even apple to some degree, does the back half of the week look treacherous? >> it looks very difficult to handle. treacherous might be a little strong, but, yeah, we could bump into some very serious things. and i think it's going to be interesting.
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i am of a minority that believes that perhaps bernanke has not been able to corral enough votes. although the market is expecting it to be there. so i wouldn't be surprised to see, perhaps, just an extension, we're going to go to 2015, but we stand ready if needed. and i think the market will be disappointed in that. >> art, thanks for coming by today. >> my pleasure. >> art cashin. meantime in chicago, the teachers strike sparking widespread debate making its way into the political arena, as well. we'll get an update on the negotiations as the strike enters a second day in just a moment. at usaa, we believe honor is not
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>> watching shares of travelers today, the stock up 1.1% at this point. it's important because the company says that insurance rates are continuing to rise, not only in the business segment, but for the individuals, as well. and that is extending pricing power. business insurance rates are up 7.7% compared to 7.2% last quarter. and look at that stock price there intraday up 75 cents for travelers. carl? >> thanks a lot. meantime, the first chicago teachers strike in 25 years into the second day this morning. it's left 350,000 students at home. the most contentious issues, performance evaluations and recall rights for laid off teachers. kevin tibbells with the latest on that. >> for the second day running, parents of some 400,000 kids here in chicago are trying to find alternate places to take their children because the teachers here in the public school system remain on strike. i'm standing outside the headquarters of the chicago school board today. negotiations and this is probably the only bit of good news here, negotiations are
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continuing today. and the -- that talks are progressing and they could end this strike as early as today. unfortunately, from the teachers' side, their negotiators are saying that no deal is going to be made until the chicago public school board comes up with a better offer for them. what's the main sticking point? well, it doesn't really seem to be money here. what it does seem to have to do with is teacher evaluations and having teachers' jobs tied to test scores whether or not the chicago kids actually come up to the national standards because they are lagging behind. these talks have been going on day and night since those strikes started. we'll bring you any updates should there be any throughout the day. kevin tibbles, nbc news, chicago. an exclusive interview with the ceo of the world's largest gold producer, barrick gold.
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welcome back. morgan stanley and citigroup have agreed on a value for the
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joint venture. of course, the biggest brokerage firm in the country is currently controlled by morgan stanley which owns 51% and will soon buy another 14%. but the two sides had a significant disagreement on the value of the overall firm. citigroup believed it was worth $23.3 billion, morgan stanley believed it was only worth $9.5 billion, hence they went to a third party to figure it out. now, if they had actually come up with a valuation and ended up in the middle third, you following? the middle third of those two values, let's call it somewhere between $14 billion and $18.2 billion, then both firms would've had to settle for whatever that number was. however, sources tell me they did not come with a value above that $14 billion, hence it was left to the two sides yet again to hammer out a deal. once citi saw that number, though, below $14 billion, it appears to be willing to play ball and abandon its $23.3
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billion valuation, and you got to a deal under which they valued the firm at $13.5 billion. and, also, very importantly, they also have a time line under which morgan stanley will still use that value to acquire what it doesn't already own. a morgan stanley/smith barney by june 2015. along with all of those brokers and full control, of course, is the firm that will come by 2015, including the 14% it will very shortly buy $13.5 billion value. morgan stanley does get $15 billion in deposits, that's something. and complete a deal under which it paid $2.7 billion and combined the brokerage unit with that of smith barney, again, creating the largest brokerage unit in the country. one, perhaps, some say morgan stanley doesn't get enough credit for, but doesn't include global wealth management. we should point out that stocks of both companies are up rather sharply. this was not a controlled
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premium being paid here. it was a determination of the fully distributed trading price that this firm would've had as of june 1st, 2012. 1st, 2012. apparently the two sides believe that was $13.5 billion. >> so almost 10% over last week. >> yes. there will be a significant writedown associated with this. take 49%, $23.3 billion, that's where it was marked and say well it's only $13.5 billion, there will be a significant writedown for them. at the same time, they're taking in another $6.61 billion for morgan stanley to pay for the rest of this over time. and they move on becoming a simplified firm which is something they said at a presentation yesterday and they were emphasizing as one of the goals. >> the whole group, by the way, up sharply in today's session, not just citi and morgan stanley. we're seeing big gains in j.p. morgan, goldman sachs and bank of america. it had a 10% gain on the week.
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continuing the gains here this week. coming up next, we have a few of the big movers. we're back in two with that. first, rick san tell, what are ong? >> we're going to talk about picking and choosing. picking and choosing isn't relegated just to conditions by the ecb or repressive societies that decide how many kits you hav kids you have. there is picking and choosing in the u.s. as well. we're going to talk about that at the top of the hour. it's a game changer. ♪ it means cleaner, cheaper american-made energy. but we've got to be careful how we get it. design the wells to be safe. thousands of jobs. use the most advanced technology to protect our water. billions in the economy. at chevron, if we can't do it right, we won't do it at all. we've got to think long term. we've got to think long term.
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deutsche banc announcing plans to cut costs and shrink the balance sheet. our colleagues at cnbc europe catch up with the co-ceo earlier today. >> let's not forget we had rto not too long ago and now the bond buying and we have the imf involved and esm. i take the greatest heart from the fact that there is tremendous desire to keep euro-zone together. >> i can't see how they can
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retain staff here in new york, those they're not already laying off. we have people from deutsche banc coming in here and they're so pessimistic because the stock price is down, because of the scandals. and now they say they won't raise cash and capital, they're going to cut bonuses further. deutsche bank is not going to retain their staff here on wall street. >> is there demand out there to actually hire, retain -- >> they can do something else. >> well, yeah. there's a broad swath of people that make a decent amount of money that are watching compensation come down and it's less clear they're going to be able to find employment elsewhere. that is the bet that the institutions are making in terms of bringing comp down. >> maybe they don't want to maintain the franchise. >> you are a global investment banker or you're not. if you are, then you have to keep an office in certain places including well maybe a little city like new york. >> i agree with you. >> yeah.
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>> i assume we're going to be covering a lot of this tonight? >> banking. and also we have that live interview with mark zuckerberg. we're going to have that live. we'll be showing you that interview as it happens. and while it happens we'll get trader reaction and we'll see if he's saying anything that convinces traders, as the traders on "fast money" to change their minds. >> that is a fascinating juxtaposition. that is going to be fascinating. >> we'll give you the lowdown on what to make of it, that's for sure. >> facebook is up 2% today. >> and you'll look ahead to what apple will say tomorrow. >> we have a sneak preview from boy genius. they're known for taking part these things. we're getting sneak previews from channel checking, et cetera. and jonathan geller, the editor in chief at boy genius will join us and give us the details that other people might not know about when it comes to the features on this iphone 5. is it revolutionary or
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evolutionary? we'll see what happens with it. >> yeah. and we're still digesting that j.p. morgan note saying it's going to add 33% to gdp. do you know how many small businesses pivot around apple technology? >> it's not just small business. you think about fedex. with the release, with the big product releases in the back half including the iphone 5, that can really help the likes of the shippers. the product has to get to stores and consumers hands somehow. >> if only apple made it here in the united states rather than in china. think how much more it could add to gdp. >> think how much more it would cost and how many fewer people would buy it. that's the flip side. >> i guess, yeah. although jobs apparently told before he passed away told president obama that if he had 30,000 frpg neaengineers, he co it. that's a meeting they have. they have more engineers in china overseeing the process. he talked all the time about a shortage of engineers here in
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the united states which is not an insignificant problem. >> before we go, take a look at the retail losers today. ralph lauren is the biggest loser. tive n tiffany's on the list, whole foods, coach. businesses that cater to people of a certain income. >> how many ways can you color the same check and hope to send it around the world? they're not a respected name for a lot of people in the united kingdom. it is actually a down market brown. >> down market? >> if you believe that, at least there are buying opportunities when you see the others. i have a bbe coat. >> it's getting chilly now. >> of course, simon, see you in a bit. if you're just joining us this is what you missed earlier on this morning. >> welcome to hour three of "squawk on the street."
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here's what's happening so far. >> if mark fields delivers a ford fiesta with three wheels, he's out. if i deliver a kid at the end of high school that can't be employed or can't go to college, out. >> this was the most egregious example of preconditioning the market i have ever seen. >> how so? >> the way it was promoted. >> urban outfitters brings in the founder that their stores are completely revamped and their price points are great. and barbury is expensive. 500 for a not great raincoat is not what i'm going to pay! >> do they have it in them? do they have the goods? >> wow. yeah. i think they do. i'm going to say that they do. i don't think that they're a complete bunch of idiots and more yonz. i don't see them being total hacks and losers.
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>> there's no doubt in my mind new york being the city that is it, the city of opportunity will continue to attract business from all parts of the globe. and we'll continue to prosper. >> good tuesday morning live here at the new york stock exchange. we want to get a check on the markets which are staging a rally here. dow is up 82 points. nasdaq more than nine. more than making up for the losses the market sustained yesterday. the dow down 55 or so. luxury retailers, some of the worst performing stocks today after burbuerry's profit warnin. green mountain spiking on the news that italian coffee giant boosted stake in the company from 7.7 million representing a 6.8% stake in green mountain. let's get to the road map this morning. the ceo of the world's largest gold producer is here for exclusive interview. he'll tell us how the company is
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being affected by rising gold prices and a lot more. plus, as we've been saying all morning, mark zuckerberg set to take the stage in a few hours at that crunch disrupt conference. we'll talk to an expert on facebook, david kirkpatrick. and less than 30 minutes from the close in europe. germany says there is great uncertainty about u.s. debt. we'll see what that means for markets here. then the new trend in manufacturing that could be a huge threat to jobs in that industry. we'll tell you all about that and more coming up in the next hour. a fascinating story, news that the irs is awarding ubs whistle-blower a $104 million for his help in uncovering ubs' illegal off shore banking investigation. >> attorneys for brad birkenfeld revealed the irs is going to pay
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him $104 million. now birkenfeld who was released from prison just as recently as august is now under house confinement and the terms of the probation prevented him from attending this press conference today. but his attorney said that this massive payout should send a message to other potential whistle-blowers and other wrong doers throughout the country. >> today the irs sent 104 million messages to banks throughout the world. stop enabling the tax cheats. stop committing money laundering. and you will be caught. >> now the irs releasing a statement this morning confirming the $104 million payout. the irs saying the irs believes
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the whistle-blower statute provides a valuable tool to combat tax noncompliance and this reward reflects our commitment to the law. now i interviewed brad birkenfeld in a federal prison in pennsylvania last year. it's an astonishing turn around in personal fortunes for a man who spent 31 months in federal prison not knowing whether he would receive a dime for the cooperation that he gave the united states government as we interviewed him. he deposidn't know what his fat would be. he found out he will be the recipient of $100 million. of course, he paz to pay taxes on that and pay his attorneys. but he is certainly going to be personally wealthy for the rest of his life as a result of those disclosures which, of course, led to ubs paying a massive fine and thousands of american taxpayers being caught for keeping secrets with swiss accounts overseas. >> you got that right. a lot of ears just perked up
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among would-be whistle-blowers around the world. >> that's right. >> let's get to the capital markets. gary cominski. >> that was fascinating. inseeder selling, we touched it a couple weeks ago. take a look at august. huge amount of selling in terms of insiders unloading stock. typically -- here, let's look at the numbers. $5.9 billion in august. basically one to ten ratio of buying versus selling. it was the highest since april. typically this could be looked at as a sort of sign of maybe we've seen a short term top in the market. i continue to think stocks will move higher for reasons related only to relative performance. i want to point out why insider selling is different here. i spoke to a number of people that confirm it. this being much more about concerns about capital gains taxes next year as well as something we touched on as well, the outlook for 2013 earnings
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that a lot of ceos and executives that are out there for their own companies. again, this may not be a short term thinking in terms of the stock market by the people that are liquidating the stocks but other concerns. so don't read something into this. it is not a negative indicator the way i see it right now. >> interesting. we were talking with cramer this morning. and we've had strategists come out and say look for near term pullbacks. cramer said theoretically that makes sense. but the mechanics of the market suggest otherwise given what you're talking about. >> you don't have a lot of problems with strategist. i think much of the work is garbage in and garbage out. they don't understand what it's like to manage money. they don't understand what the real concern of relative underperformance is right now. i think that trumps everything else. take a quick look at morgan stanley. let's give a little kudos to this op-ed. we told you on thursday what we expected in terms of morgan stanley this week. and in fact, you saw the value come out. obviously very positive for
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morgan stanley, it did not have an impact citi bank. i think this was a changing of the tune after many years of bad news. >> look forward to talking to you. >> you got it. >> let's get to the cme group. check in with rick santelli. get a tuesday editionst santelli exchange. good morning, rick. >> good morning, carl. when people say pro-choice, that's usually, you know, a social issue on abortion. i'm talking about pro-choice as in picking winners and losers or picking and choosing the type of behavior that a people or a citizens of a country should live or lead what type of life. of course, that comes from the top down. i think with tomorrow's ruling on the german court and entire idea of the ecb and their conditionality notion that they also are going to be picking winners and losers. consider, you know, sylvia has
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grate piece that goes into the nitty-gritty about she's always found great respect for the ecb. but she thinks conditionality has a lot of short falls and i happen to agree with her. picking which country whose bonds you're going to buy, whose funding you're going to influence is base od on a sest rules f california and all the states were independent, does one state have the right to tell another state what to do without representation? that's a form of taxation. it doesn't end in europe. it's one example. choice. do people in china have a choice of how many kids they want to have? the more choices you have, the more freedom you have. when it comes to the united states, the list is long. in front of an election i saw some young people a couple days ago and a question was put forth how do you define freedom? the young kids i think they were first or second grade had the same answer. the right to pick and choose how
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you want to live. but whether it's the light bulbs, whether it's the kind of cars you drive, whether it's which companies make it or not, which companies go through traditional bankruptcies, spent a lot of talk about gm and chrysler. i don't know how far ford would get down the road making a car that sold for $49,000. yes, i'm talking about the volt. that big story yesterday. i'm not saying whether that number is right or not. it gets the point across. the biggest issue of all is when the government takes over things like sally may and fannie and freddie, they limit your choices. they have government girth behind whether can you live in your house and how much it costs if you can't afford it. republican, freed so many about choice. your choice. back to you. >> rick, thanks for. that good stuff. rick santelli in chicago. let's get back to hq. >> i want to highlight amerin. the pressure is coming because it doesn't expect a decision
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from the fda this month on the exclusivist of the heart pill. that is itching for that. take a look at this chart. we're down 77 cents. carl? >> all right. thank you so much. let's get to hampton pierson. >> carl, here we have congressional leaders coming back after a six week summer recess and literally the first time we hear from congressional republican leaders we have house spear john boehner saying he's not confident congress can reach a budget deal and avoid a downgrade of the u.s. debt rating. we know moody's investor services is saying they would likely cut the aa rating on u.s. government debt probably by one notch if budget negotiations fail. well, here's what boehner had to say when asked at a capitol hill news conference about how confident he was that such a step could be avoided. >> i'm not confident at all. listen, the house has done its job on both the sequester and on
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the looming tax hikes that will cost our economy some 700,000 jobs. the senate at some point has to act. and on both of these, where's the president? where's the leadership? absent. >> and keep in mind it's overall congress that has that something like 80% disapproval rating and the first words out of leadership, more of the same and less time to get nothing done. carl? >> and so it begins. i can't wait for the fall. thanks a lot. when we come back, the ceo of barrick gold is going to join us live for his first tv interview since being appointed in june. he'll give us his take on rising gold prices, the future of the company and a lot more.
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utilities, of course, more defensive play doing the worst right now. the dow is up 85 points. here's how the s&p 500 energy sector is doing. the dow in the past few moments hit another 4 1/2 year intraday high. want to shine the spotlight on gold as well. the precious metal losing its luster. rebounding. barrick gold is the largest gold producer. the share is down 6% since the company appointed a new ceo in june. up nicely in the last month. here for a cnbc exclusive is
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jamie sokalsky from barrick gold. good to have you. [ no audio ] >> i assume can you hear me, jamie. if you can't, we'll work something else out. in the meantime, you're part of a phenomenon that has taken the industry by storm. that is replacing their ceos because of investor frustration that shares of the miners -- i'm told we do not have him. talk about beginner's luck. we'll try to get him back. in the meantime, when we come back, rick santelli talks to lindsey gram. lindsey graham.
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we're going to try to work out our technical issues and get back to barrick gold. the audio wasn't working at the time. jamie, goods to have you back. good morning to you. >> good morning. great to be back. >> i wanted to ask you, i started out by saying that your appointment as ceo came as part of an industry wave of new ceos as a result of investors frustrated because miners have not been able to keep up with the absolute metals price. what needs to change in order for that to happen? >> i think it needs to have a lot more discipline in term of managing the capital that we're investing and also managing the assets that we have. we can't just rely on the gold price to drive our earnings. we have to run the gold industry as a business. and that's what we're doing. we've announced discipline capital allocation program that's going to be much more
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focused on an adjusted rate of return and also free cash flow. and so we need to be more disciplined in how we're managing our capital and also return more capital to shareholders as we're generating more free cash flow. >> you recalibrated five-year growth targets that your predecessor had. your monday tra antra is produc drive returns. does that mean we're scaling back capital expenditures, expansion of projects that we've been seeing from others? >> i think that's part of it. it's part of not just scaling back for scaling back's sake. it's making sure that every dollar that we spend earns an acceptable rate of return. and it's optimizing the portfolio and also increasing the quality of the portfolio like we're doing. and so it's a comprehensive program that is not just about scaling back but it's about
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being disciplined in the investments that we are making. we're bringing on two new minds that are going to add about 20% more production for us at very attractive rates of return, long life, 25-year plus mines at an average cash cost of 100 per ounce. so it's not just about scaling back but it's about making smart, good, attractive investments like barrick is doing. >> and when you talk about returning capital to sha shareholde shareholders, go through some forms in which that could happen. is it a special dividend? is it accelerated buy backs? are there other avenues can you take that is a little more inventive? >> well, i think what we have been focused on is paying a progressive sustainable dividend and over the last six years we've increased our dividend by about 260% as the earnings in cash flow have increased. so our focus is paying that dividend. one other alternative is to do share buybacks if that makes sense. but our goal is to continue to
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earn more money and if we can do that to pay more for shareholders through a return of a higher dividend. >> and is the -- i want to ask you when a dividend may be coming or may be coming. is that a 2013 phenomenon? do you see it as part of a broader five-year program? >> well, we've had a good track record of increasing dividends primarily on a yearly basis. but we've got a fairly large capital spend ahead of us. as we finally get our mine into production, we feel that we're going to be generating significant free cash flow in 2014 going forward. so it's that type of time horizon that we'll look to increase shareholder returns. >> it's always fun to ask mining ceos about the price of the metal. it has had a nice run as we wait for big macro pictures out of europe, out of the fed here, price of reflation.
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what is the outlook of metal's price end of this year and beginning of next year? >> well, i think the factors are in place more than ever for further rise in the gold price. we've got qe-3 on the horizon, mormon takery stimulus. we've had central banks buying a lot of gold in the first half of this year. it's a sea change in sentiment with central banks. they've gone from sellers to buyers. demand is still strong. there are more than -- there's more than enough uncertainty in the world. i think that the gold price could definitely surpass previous highs. go above $2,000 and even higher. very optimistic about further increase in the gold price. we have great leverage. every $100 increase in the gold price adds $500 million of additional earnings and cash flow to the company. >> jamie, it's great to you have. hope you'll come back often. >> thank you very much. it's great to be here. >> jamie sokalsky.
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the new ceo of barrick gold. let's get to rick santelli talking to senator lindsey graham this morning. >> absolutely. south carolina senator lindsey graham on the 11th anniversary of 9/11. welcome, senator. i know you want to make a comment about this 11th year anniversary. >> yes. time to reflect and remember the victims and keep them in our prayers and just a big shoutout to the law enforcement, military and intelligence community that's been fighting so hard to keep us safe for the last 11 years. we've got real money problems. but that's not the only problem we face. that's all i need to say. >> you're exactly right on that. pursuant to the other problems, you know, within the last several days we crossed the $16 trillion mark on the deficit clock. and today moody's basically giving kind of forward guidance on exactly what they're going to be looking for with regard to our fiscal situation. can you tie those together and give me a comment, senator?
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>> yeah. it's better for the country to have a political fight over how to resolve our debt than it is to raise the debt ceiling without addressing what got us into debt. so when the day comes for the congress to vote to raise the debt ceiling, i understand the chaos it creates when we're unsure that the debt limb it is going to be raised. that, to me, is secondary concern now when you're at $16 trillion. so i'm not going to vote to raise the debt ceiling until we get an agreement on entitlement reform, tax code reform, and some handle on the discretionary spending that will be seen positively by those who look to america for leadership. >> you know, this is kind of rerun though. everything you're describing is kind of similar to the last go around we had on this where there was a group in the house that were vilified for taking the exact stance that you just outlined. it's an election year, senator. and there's three debates coming up. when you look at the moderateors of the debates, i'm not sure if
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they're best suited to be discussing some of these intense debt and economic issues. i wonder why the republicans haven't tried to stress picking a moderator or an additional moderator to really get at the issue. in your opinion, that is the issue for the election. >> i'm going to make a prediction here that those who voted to increase the debt ceiling last time based on the idea of the super committee are going to be very hard to vote for a concept like that again. the super committee was a serious flaw. and those of us who tried to do cut cap and balance to raise the debt ceiling, i think our portfolio has grown, our numbers have grown. and what good is it to raise the debt ceiling if you don't address why you have debt? i'm going to try to be a reasonable guy. i have to do everything i would like. just have to address the problem in a fundamental way. we know entitlements have to be reformed. we know that tax code is broken, very hard to create jobs over
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the current tax code. let's do a simpson bowls type deal then we can raise the debt limit with the idea that we're eventually going to turn america around. anything short of that is just going to make our problems worse. >> i'm glad you brought up simpson bowls. "the wall street journal" did a wonderful piece yesterday. there's a bit of revisionism going on. just take mr. ryan and his vote. he didn't vote for it. not because he didn't like parts of it, but because the health care is completely off the table. how can you get spending under control when obama care wasn't even part of the equation? >> you cannot fix our long term debt situation without affecting medicare and medicaid. medicare and medicaid combined are going to consume all the revenue in 20 years. that's how fast the programs are growing. but the idea of a simpson bowles formula makes sense to me. that is republicans would generate new revenue not by raising taxes, by limiting deductions and exemptions and
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democrats would agree to entitlement reform and we all agree to discretionary spending caps. that's the magic formula and health care is the big driver of the debt. so that's what i'm looking for is both parties giving. i want more revenue not from higher tax rates but by eliminating deductions and loopholes and flattening the tax rates and flatten the tax code. >> it should be a very, very engaging season. >> you should be on the panel. you should be in the debate. >> oh, i'll tell what you, i certainly would ask tough questions about the economy. thank you, senator. carl, back to you. >> all right. rick, thanks a lot. just a few moments left in europe's trading day. we'll get the close and the details on the impact it's going to have this afternoon and for the rest of the week. sometimes investing opportunities are hard to spot. you have to dig a little. fidelity's etf market tracker shows you the big picture on how different asset classes are performing, and it lets you go in for a closer look at areas within a class or sector that may be bucking a larger trend.
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we know what you're tomorrow morning at 4:30 a.m. eastern time. >> just note that we're actually higher as we close out on western europe. obviously a lot of bleary eyes in the uk as they watched murray when the u.s. open went well into the night last night. we are higher on the session overall than we otherwise might have been. partly because of stock stories that have driven us. deutsche banc as you'll ab ware, if you've been watching the program, has come through and announced the new strategy. in essence, deutsche banc is not going to be raising more capital
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at this stage. it's going to cut down its costs further and sack more people particularly with securitization and derivatives. the fact there is not a greater dilution of the shareholders means that deutsche bank has risen and some of the banks around europe have also risen in sympathy and the co-ceo of deutsche bank telling us the return on equity will be at least 12% but that target is now set for 2015. listen to what he had to say. >> one of the reasons that we're going with the 2015 horizon is because we feel that that's the period of time of which we have should have some fair clarity. >> other banks, as people attempt to raise money for -- to bolster the banks around europe, others are not faring so well. over in portugal, millennium is one of the biggest losers today on what is left of shareholder equity. the other big story today is
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burberry. that stock hits in london as it comes through warning about the sales overall. a mean a tremendous run over the last five years as you can see from that stock. the other luxury goods sector plays around europe as you have here with tiffany, they've been hit as well. cartier, chloe, swatch is higher. they have the tiso brand, christian dior. it depends on whether you burberry is a burberry specific phenomenon. some argue they're not executing as well. if you believe that, this is potentially a buying opportunity. tomorrow we get back to the big stuff. today, all the stuff we talk about all the time. and today in athens, trade unions blocked the way of the troika getting into the labor ministry to try to continue those discussions. there was a human chain. so those negotiations didn't go so well. at least there was a delayed start. in madrid, a lot of people are
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rae reeling from the fact that prime minister of spain suggested wasn't going to apply for a bailout in which there would have to be con trecrete policie. so that's him playing hard ball there. not great news. and to the point that carl made right at the beginning of this section, tomorrow is super wednesday as j.p. morgan has dubbed it in a note today. a lot of stuff is going to go through. before we go on the air, 4:00 a.m. you'll get the german constitutional ruling on the safety net which was spoken about so often. just an hour before that, they'll unveil the banking union that they're talking about and that could be controversy. that might spark some ire in both germany and the united kingdom. and also we have the dutch election results which will come through in the afternoon our time, 3:00 p.m. in the afternoon. that could also be a bit of a concern. back to you. >> going to be a big day tomorrow. get some rest. >> as always. >> let's get a check on energy
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and commodities. crude up is almost $1. >> a lot of traders are still waiting to see what happens tomorrow because of super wednesday and all that simon outlined. add to that for oil traders that we're going to get the weekly data from the energy department. so that is also going to have an impact on crude prices. we're looking at the medathe me. thursday with the fomc decisions, that will be key for the direction there in the metals market. the big outliar here and the standout in the commodity space is natural gas. it's up about 30 cents in two days at a one-month high right now. approaching the $3 level. traders are talking about the fact that yes there's been technical buying, sort covering going on. but also the expectation on thursday when that weekly data is released from the energy department. we'll see a smaller storage injection than we normally see for this time of year and traders were earlier anticipating because we did have a lot of the heat wave through muchst country and, of course, the residual effect of the
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losses from hurricane isaac. back to you. >> all right. sharon, thanks so much. sharon epperson at the nymex. bob pisani is watching it here. >> here we are, 13,349 was enough to do it here. we're essentially a five-year high. the s&p 500 -- excuse me, the dow was last here december 31st 2007. so let's not quibble here. we're 4 1/2, almost 5-year highs. we're essentially there. we're watching the s & b. there is a chance that will do it as well. a lot of these risk on trades are back again. we have seen money going in to financials, money going into energy and materials. so take a look at some etfs. one of the ways to watch this is watch volume and etfs. i follow a couple hundred of them. look at the volume here. what is getting noticeable volume, energy, etf, you can buy the whole energy sector at once. that is very good volume. germany is at a new high today. germany is getting bought
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heavily. australia has heavy volume as well. so here's kind of like the risk entree that you're seeing. what is moving the markets today? what's motivating people interested in stocks? let me give you three or four points. simon talked about the german court aproferring the esm. we have a euro breaking out to a multimonth high. germany at new highs. the premier of china, we didn't talk much about this. he came in and out a speech saying china is on track to meet economic growth targets. they have 7.5% gdp. a lot of people are arguing they may not make it this year. the premier is saying they're going to make it just like going with the fed, go with the premier at this point. i think a lot of people. apple's announcement. all the funny things around it, carl, with j.p. morgan talking about apple's iphone could add 0.33% to the gdp of the united states. there is all sorts of silly notes like this floating around. that helps confidence a little bit, of course. finally, you have that fomc announcement. let me make a quick comment on the german ruling tomorrow. a lot of people are worried
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about the conditionality that court may impose. they'll approve it. everybody believes that. what is the conditionality? first off, everybody believes that they're going to require them to have approval for any more bailouts in the future. that's obvious. that's going to happen. here's the two things people are worried about. some people are arguing there might be some kind of ceiling on the amount of german exposure for future deals that are out there, some kind of euro limit. that would not be good. it would imply the bazooka is not essentially incident. here is one that is particularly disconcerting. some have been arguing that the court may rule that there has to be -- because we're getting very close on european integration that there has to be a change in the german constitution. i think this highly unlikely. but if that happens, you'll definitely have some people concerned about it because, again this would imply a big, big fight looming down the road on any further movement towards integration. but i agree with simon, that's going to be an important ruling tomorrow. >> seems like we've been talking about this forever. >> the only thing that will change is the conditionality. it's not approval that's in
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doubt, it's the conditionality. >> thanks. busy day shaping up tomorrow. let's get to mary thompson. she has a special celebrity guest. i know who it is. i know you're going to tell us in your own time. >> i will tell you. i wish you were here, carl. this trading floor is buzzing. celebrity has been coming through all morning. we've seen buzz aldrin, second man on the moon, kate upton, "sports illustrated" covergirl. mariano rivera and also venus williams is here the tennis great. joining me now, of course, is ed norton, the movie star. he starred in films including "the incredible hulk" and "fight club." first of all this is a day where they're raising money for 25 different charities. tell us what charity you're representing today. >> i'm working with the charity called the wilderness conservation fund. what it is a really fantastic economic development and poverty
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alleviation organization worging in africa. >> what does it do? >> this organization the reason i think it's actually really relevant to everybody all over the world and even to people in the financial world is that it's really trying to address that critical question of how do we keep achieving economic development, economic growth in the developing world while achieving environmental sustainability at the same time? so addressing, you know, human economic needs along with environmental sustainability which i think is one of the issues at the crux of the 21st century. >> what do you do with your own money? cnbc, of course, is a business channel. i'm curious. how do you invest your money? >> i, you know, i don't want to give away too many of my trade secrets. you know, i am involved in some of the equities markets through certain funds. i'm lucky among my circle of friends i'm the black sheep in
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terms of someone who went into the artistic life. i have a lot of friends who work in the financial world. some people who manage some very successful funds. and i've been able to -- >> you're a yale graduate, right? >> i do. i have some good allies in it all. but i've been -- i'm a big believer in the tech sector in the united states. i think it's one of our most potent kind of growth sectors. i've been lucky enough to invest kind of early phase directly into certain companies like companies that are not publicly traded companies. uber is like everything i love in a contemporary american company because it's finding a business and creating -- and finding inefficiency in the market and creating great service. >> it's one we'll have to watch. thank you so much for taking the time to speak with us today. we have been speaking with ed norton. thanks again. >> sure.
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>> one of the best out there. so nice to see so many people coming out to cantor and their good work. >> carl, as ed said, if you watch the financial services, there is no doubt that somebody close to you was affected by what was just a disastrous and terrible day. let me say my thoughts today are with my former colleagues from the late '80s. timmy grazioso and marni pont o' doherty and morty frank. yesterday we showed a chart that was quite compelling. many people in the industry were buzzing about it. talking about the long term relationship between the bond yields and the s&p 500 dividend yield going back to 1871.
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when i looked at the bond issuance yesterday, if we can bring that up, yesterday was the third biggest dma terms of bond issuance. if you look at it, it was $18.95 billion, preliminary numbers. probably going to go up. but obviously cfos paying attention to what we say here and they're listening. whether or not this is a pivotal point for the bond market, we've had false signals before. clearly, corporate america is taking advantage and locking in those rates right now. i'll stay on top of this and we'll figure out whether or not this was a pivotal sign. we had a number of false signals in the past. >> yeah. what a day though it was yesterday. some of the biggest -- as you said, historic in many ways. >> if you're not going to price a deal, you may not be a public company cfo. >> absolutely. thanks a lot. >> let's get across the room over there for a quick market flash from jackie. >> carl, on a day where the indices rup, we're looking at tipco's offering, down 8.5%
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right now downgraded from a hold to a buy. they also lowered the price target to $32. in a note they say that there may somebody lingering organizational issues with the america's unit. that could lead to head count reduction. so take a look at that chart there. rough day for tibco software. >> thank you so much. straight ahead, it's been a rough road for facebook ever since they went public earlier this year. can mark zuckerberg spark a turn around when he speaks later today? we'll talk to the author of "the facebook effect" in just a moment. but i'm still stubbed up. [ male announcer ] truth is, nyquil doesn't unstuff your nose. what? [ male announcer ] alka-seltzer plus liquid gels speeds relief to your worst cold symptoms plus has a decongestant for your stuffy nose. thanks. that's the cold truth! ♪
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coming up on halftime, what if iphone 5 disappoints? we'll trade america's favorite stock ahead of the big announcement. mark zuckerberg is coming out from under his hoodie for the first time today. will it help or hurt the stock. looking for yield, a top fund manager reveals which sector has the best dividend growth potential. we'll see new 15 or so at the top of the hour. >> the next big trend in manufacturing could also be the next big threat to the industry's job rebound. good morning, phil. >> good morning, carl. what if you were running a company and i told you could continue cranking out product 24/7 even if you didn't havers
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at the plant? this is the trend in the industry. more companies are going in this direction. machine makers say they're talking with manufacturers who are dying to be able to use the machinery 24/7, particularly if they don't have to have extra manpower in the plant. and they say this is all about survival. >> it's more about survival than anything else. if we as americans are going to continue to compete and try to regain our dominance in manufacturing, we have to compete against the cost of the chinese, vietnamese, taiwanese, south americans at the labor rates of 50 cents an hour to $1 an hour. the only way we're going to become more productive is driving out those costs. >> so what's the impact in terms of employment? companies say that lights out manufacturing means they're not going to need as many low skill workers. doinlt need people on the line at midnight. the machine is cranking out the product. you don't need somebody there. what they will need is more skilled and educated workers
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working 24/7 often monitoring and running the machine through the cloud and remotely over their ipad or computer. as you take a look at the manufacturing job growth in this country over the last two years, we've seen about 500,000 jobs added. carl, one thing to keep in mind, this trend is taking off. we're going to see more and more plants, in fact, we're talking with one company in minnesota where they added a third shift. they don't have any workers in the plant. we will see this more and more across the country. carl, back to you. >> wow. that is unbelievable, phil. thanks so much. that is eye opening. when we come back, mark zuckerberg, talking about technology, set to take the stage in his first interview since the company's ipo. what does he have to say tonight to calm investors? that's next.
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more developments on this morning. citigroup and morgan stanley saying that the independent valuation of smith barney as implied as less than the $13.5 billion deal pricetag. one source continuing to say that it was roughly in the range of a billion dollars lower. now that valuation was as of june 1st 2012. so when the two banks, the ceos and morgan stanley's rob kinler and rob kelly, when they got the information, they had to take the valuation into account and the fact that the market was up roughly 15% since that valuation was relevant.
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now there were three key sticking points. first, the implied tax benefi t of the business and how much it increased. the second is the capital stretcher of the unit. the third is the state of a preferred stock instrument being carried in the business. if publicly trade wod stand at roughly $7 billion. a potential refinancing of that was discussed according to my sources. the deal was supposed to wrap august 30th. the banks were hopeful they could negotiate the issues. the independent appraiser never disclosed that magic number which remained unchanged in the last ten days as the deal got delayed. the delivery yesterday, carl, resulted in a flurry of overnight negotiations between the four executives. definite lit end of a long road here. >> very complex. almost enpenetratable story. that does shed light on it. thank you so much. mark zuckerberg is coming out of hibernation tonight. he'll be giving his first interview since the ipo in may. what will he need to say to the investing community to instill
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confide confidence in his company? david kirkpatrick is the author of "the facebook effect." >> thanks for having me. >> let's start with who his audience is tonight. you suggest that he's really in his head at least he's talking to a room full of geeks. >> that's exactly what he is literally going to be doing. he's at the tech crunch disrupt conference which is a very inside baseball silicon valley audien audience. the global investing community is paying attention and waiting to hear something from him since the stock went public, you know, and began plummeting. >> yeah. so is this a good move or not? do you think he's making a mistake? >> well, he's clearly got to get out there and say something. it's a good move in the sense that he is out in public for the first time. i think many of us have hoped that he would have come out and said some things that were reassuring a little sooner. but i think the question is will he say anything that really is
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the kind of thing that investors want to hear? what he wants to do is talk about product. that's all mark zuckerberg really likes to think about and talk about on any day, no matter what the stock is doing. so the question is will he be able to deliver a message about the future of the product and the customer base that would be perceived by investors as a positive long term sign? and that's really anybody's guess. >> i wondered. we were having a discussion this morning about whether or not there would be a moment, a holy cow moment as jim cramer said where they rollout some plan, or they address mobile. do you think that is more likely than not? >> i don't think they're going to rollout any new product or plan. i think he'll be pressed by an extremely aggressive interviewer to talk about montezation about the service generally. i'm a little concerned, frankly, for mark because i think that he is going to be pressed in areas that he might not really want to
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be pressed in. if he's pressed on this and doesn't have something relatively coherent and clear cut to say, that could be interpreted as an extremely negative sign by wall street which is, you know, not terribly optimistic as it stands now. >> yeah. i wonder. david, you're the perfect person to ask this. the rdecision not to talk, are they scared? >> it's the latter. there is no scaredness here. these people don't run scared. it's all about mark, after all. he is just focused on the long term. that's the way he is. it's not a particularly good match with a public company audience because he would like to talk about how facebook is going to be in three years and five years. people want to know what's going to happen in the next quarter. how are you going to monday ties mobile now? i'm afraid that it isn't his mindset. and he's unlikely to say the kind of near term reassurance
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that people want to hear. if people listen for the long term and they think of this as a real long term go along on the stock, they could hear positive things from him. >> david, appreciate your insight. i know it's been a busy one for you. we'll talk you to next time. >> thanks so much. >> david kirkpatrick. of course, you can watch all of mark zuckerberg's interview today on "fast money" at 5:00 p.m. eastern time. we'll get final thoughts after the break. at optionsxpress we create easy-to-use, powerful trading tools for all. like our all-in-one trade ticket. we put strategies, chains and positions all on one screen. start trading today with optionsxpress by charles schwab. every time a local business opens its doors, or makes another sale, or hires another employee, it's not just good for business. it's good for the entire community. at bank of america, we know the impact that local businesses have on communities.
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oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.
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we have a lot of news today on morgan stanley. what is your interpretation of all the news we've had to digest this morning, gary? >> really positive from morgan stanley. i was just talking to kayla. remember, option alt and the time value of money. if you're morgan stanley and you can be guaranteed that 13$13.5 billion is the exact number two years out from now, you're going to take that option any day of the week. if the s & p up is sharply over the next two years, you now know what you're paying to buy the remaining percentage here. so, yes, you could have gotten a


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